DEAR TRADERS: The 'Biggest Political Risk' In The World Is Looking More And More Possible

In a note out this past week, Citi's FX team called a disputed election the 'biggest
political risk' in the world.

They wrote:

We view most of the recent price action in G10 FX (with the possible exception of the USDJPY
rally) as being the result of squaring up ahead of the US
election and 18th National Congress of the Communist Party of
China. The biggest political risk is the potential that
the US result won‘t be known due to the combination of a tight
election and re-count/mail-in issues in swing states.

They cited the possibility of a nail-biter in Ohio that doesn't
get resolved for days, as mail-in ballots take a long time to get
counted.

The problem this
year is that there could easily be that many provisional ballots
cast in Ohio, where state law prohibits officials from starting
to count them until 10 days after the election.

About 200,000 of the more than 1.3 million absentee ballots
mailed have not yet been returned, the Ohio secretary of state's
office said Saturday.

...

In an effort to avoid the mess of 2004 -- when thousands of
voters waited hours in the cold to cast their ballots -- Ohio
election officials sent absentee ballot applications to every
registered voter in the state.

The aim was to cut down on lines and make it as easy as possible
for people to vote: they can pop the early ballot in the mail,
drop it in a box at a polling station or just walk into a polling
station and request an early ballot.

But if someone applies for an absentee ballot and then decides to
vote on election day -- and experts think plenty of people will
-- then they will be required to cast provisional ballots that
are sealed in an envelope until it can be proven they haven't
already voted.